Indonesia is dispatching its top economic policymaker to the United States to finalise the remaining details of a bilateral trade deal announced in July, marking a key step toward cementing what Jakarta has described as a new chapter in economic relations with Washington.
A spokesman for Indonesia’s Coordinating Ministry for Economic Affairs said on Thursday (Dec 18) that Coordinating Economic Minister Airlangga Hartarto, who leads Indonesia’s negotiation team, is currently travelling to the United States to conclude talks with American counterparts. The discussions are aimed at ironing out outstanding technical issues under the framework agreement unveiled earlier this year.
The July deal drew significant attention after Washington agreed to slash tariffs on Indonesian goods from 32 per cent to 19 per cent, a move welcomed by President Prabowo Subianto as ushering in a “new era” of trade ties between Southeast Asia’s largest economy and the United States. The tariff reduction was seen in Jakarta as a major breakthrough, particularly at a time when global trade flows are under pressure from geopolitical tensions and slowing growth.
However, negotiations have continued since the announcement, as both sides work through the specifics of product coverage and implementation. Indonesia has been pushing for exemptions on certain key export commodities, most notably crude palm oil (CPO), which remains one of the country’s most valuable exports and a critical source of income for millions of Indonesian farmers.
Ministry spokesman Haryo Limanseto said Airlangga is expected to meet officials from the Office of the United States Trade Representative (USTR) to finalise the agreement. “The coordinating minister is currently heading to the US to conclude the July deal,” Haryo said, without giving a precise timeline for the talks.
Airlangga has previously indicated that CPO and its downstream products will be a central focus of the negotiations. He noted that Washington has already agreed to lower or exempt tariffs on a number of other agricultural commodities under an executive order, including coffee and cacao.
“The executive order already includes the exemption of commodities such as coffee, cacao, and so on,” Airlangga said earlier. “Only CPO and its derivatives are left, and these will be negotiated.”
Palm oil has long been a sensitive issue in Indonesia’s trade relations with Western partners, often attracting scrutiny over environmental and sustainability concerns. Indonesian officials argue that the sector has made significant progress in improving standards and that fairer market access is essential for the country’s economic development.
Beyond tariff reductions, the framework agreement also includes substantial commitments from Indonesia to boost imports from the United States. Jakarta has agreed to spend billions of dollars to increase purchases in sectors such as energy, agriculture, and aircraft, a move designed in part to narrow the US trade deficit with Indonesia.
According to data from the USTR, Washington recorded a goods trade deficit of US$17.9 billion with Indonesia in 2024, an increase of 5.4 per cent from the previous year. The imbalance has been a recurring concern for US policymakers and was a key factor behind the push for revised trade terms.
Airlangga said this week that Indonesia hopes the deal can be formally signed next year by President Prabowo and US President Donald Trump, according to Indonesian media reports. Such a signing would give political weight to the agreement and signal both sides’ commitment to deepening economic cooperation.
For Indonesia, the outcome of the talks could have wide-ranging implications, strengthening export competitiveness and reinforcing investor confidence. For the United States, the deal offers expanded access to one of Asia’s largest and fastest-growing markets, while addressing long-standing trade concerns.
As Airlangga heads into final negotiations, attention will be focused on whether the two sides can bridge remaining differences—particularly over palm oil—and translate July’s headline announcement into a fully operational trade agreement.
